|
Dear Nick,
Through careful research I have selected one franchise
out of three that I feel offers me the best vehicle to
reach my goals. My problem is there isn't any proprietary
product or info being exchanged for the franchise fee
or the royalties collected. The business plan is very
simple and straightforward and I'm trying to find a reason
why I shouldn't start this type of business on my own
and possibly turn out a similar franchised business a
few years down the road.
Bryan
Hello Bryan ,
By all means pursue the "independent"
route if you feel that you can fully launch a similar
concept with confidence, if you can compete directly with
the franchise already established, if there are not major
stumbling blocks that will only be seen "after the
fact", and if you will not loose valuable time, money
and momentum by going it alone versus accepting membership
in someone else's franchise.
Not all franchises offer proprietary
products or services, in fact, most do not. For franchise
fees you should receive a territory to operate in, training
in running the business and use of the marks and manuals
to set up and launch the business. For royalty payment,
you should receive on-going support, new systems and developments
to keep your business current with market, trends and
technology, and hopefully marketing materials and programs
to keep your base growing.
Nick
Nick,
I am seriously researching various franchise opportunities.
However, I do not have experience enough to do the correct
demographic research and other type research necessary
to determine the viability. While I think the franchise
I am looking at is a good one, I am not sure if it would
work in the northeast (there are none located here).
Do you have a recommendation on how to research these
topics?
Kevin
Kevin,
If there are none in the NE, or in
regions with similar seasonal changes and similar ethnic/cultural
influences, then do at least two things. First,
test the franchisor's opinion and reasons as to why none
currently exist and why you should be comfortable going
in alone. Second, find out if there are similar
concepts under different names be they franchised or independent
that you can investigate. If none of those avenues
provide decent information or peace of mind, then move
on to a more accepted concept.
Best regards,
Nick
Dear Nick,
My question deals with verifying the accuracy of the
information being provided by a franchise. For example
I'm studying the ----- franchise system and I'm wondering
how I can verify some of their claims or expectations
for the territory I'm interested in. Is there a service
that I can hire to verify such data or better yet some
other venue for verification. I know most of these 'estimates'
are based on statistical data, but with an investment
of nearly 200k I don't want to, 'take someone's word for
it.'
Thank You
Adam
Hi Adam,
This is a little confusing to me.
If a franchisor provides earnings claims in its FDD,
those claims should be verifiable according to data collected
from the units used to create the claims. So, that is
one scenario. In the second scenario, and this is what
is confusing, it sounds like the franchisor is offering
you "expectations" of a new territory. If that
is so, ask them to prove it to your satisfaction. I know
of no independent company that could provide such assurances,
but I do understand due diligence, and it is possible
that you, with the franchisor's assistance, could satisfy
yourself enough to make the investment.
Nick
Hi Nick,
How do I find out if the franchise I am looking to acquire
is a positive moneymaker?
Dee
It's pretty simple Dee . 1. You talk
to the franchisor and ask if they provide earnings claims
- they are listed in the offering circular, and then,
2. You do a ton of investigation with franchisees to see
how they are doing. Compare the two answers, and then
add your own set of parameters relative to financial,
managerial, and demographic elements present in your own
situation.
Make sense?
Nick
Nick,
How would you rate the Mail Boxes Etc. franchise concept?
I'm told the royalty fees are 6% and another 3% for advertising
(in Canada ). Also would you recommend buying an existing
franchise, even though it's losing money but has great
potential with the right sales and marketing techniques?
Regards,
Steve
|
